JPMorgan’s Finn venture shows banks are probing capabilities

JPMorgan Chase announced plans to sunset its year-old digital banking subsidiary Finn last week, in a decision which Sam Maule, North America managing partner at 11:FS, said won’t be the first or last of its kind in the coming years.

“JPMorgan Chase experimented, and it didn’t see the adoption metrics it set out for Finn. I don’t see this as a total failure for the bank because it showed a willingness to try, and then they had the good sense to close down a project that didn’t take off,” said Maule, in an email.

On June 6 the bank told Finn customers their accounts would be moved over to the Chase Mobile app, while Finn checking accounts will be switched to Chase Secure Banking. Finn savings accounts will be absorbed into Chase Savings. On August 10 the app will be shut down.

The bank has not disclosed user figures for Finn. Ron Shelvin, director of research at Cornerstone Advisors, wrote in Forbes that Finn had managed to sign up 47,000 customers in the year since its inception.

“With Finn, we learned about the power of the Chase brand and what customers want from their bank,” a JPMorgan Chase spokesperson said in an email. “We’ve built Finn’s favorite features into the app, with more to come in the future.”

The US bank also reaffirmed its commitment to physical banking earlier this year with an announcement in March that it would be expanding its branch network with 90 new locations, employing more than 700 people.

According to Maule, Chase’s willingness to experiment still doesn’t let it off the hook. “It didn’t offer much more than the current Chase mobile experience, let alone anything unique and differentiated from a plethora of offerings in market today from other banks and fintech providers. This is not the first time this will happen, and it will not be the last.”

Finn was built on the same backend technology as Chase Mobile. The bank also launched a campaign of online-only account opening for the Chase Mobile app, something which it had previously pushed as Finn’s unique selling point.

“I don’t consider them to be the first bank to attempt a pure digital banking offering,” said Maule. “USAA, Capital One and Ally Bank have all seen success with their digital only solutions. Chime, Aspiration, Acorns, and other fintech solutions have seen impressive account growth over the past few years. Marcus by Goldman Sachs has set the bar for incumbent banks by proving they can launch a successful product to the mass market.

“The main difference is Goldman went all in on Marcus by offering a compelling, simple to understand and uncomplicated savings and lending product with easy and fast onboarding process. They didn’t focus on launching an app; it was entirely proposition led.”

Several European challenger banks have ambitions to break into the US market. German bank N26 announced its intentions in late 2018, though no strict deadline has been set for its arrival in the US market. According to TechCrunch, UK challenger Monzo has been working on a US launch in partnership with an established bank.

“European providers have the distinct advantage of more defined standards for Open Banking,” said Maule. “For example, in the UK the Competition Markets Authority (CMA) defined what Open Banking means for consumers and banks were to accomplish at a baseline level to meet these standards. To date and for the foreseeable future the US has taken a market driven, rather than regulatory, approach to data sharing, APIs and Open Banking.

“I believe there is an appetite for the likes of Monzo, Starling, N26, etc in the US; however, I don’t believe these will serve as the stand-alone bank for a large number of customers. It will be one of a number of banking relationships the US consumer will have and that consumer will more than likely bank with one of the top ten banks as their primary account.”